By Lewis Jackson

SYDNEY Vanguard Australia will look to buy or merge with domestic pension funds, in an effort to grow its retirement product as much as fifty-fold, Managing Director Daniel Shrimski said on Wednesday, in a market worth almost $2.3 trillion.

Launched last November, the Vanguard Australia pension product has grown to roughly A$900 million ($597 million) in assets and Shrimski said mergers were part of the plan to become a mid-sized player within five to seven years.

In Australia, that typically means between A$10 billion to A$50 billion under management.

"We made a bold decision to get into superannuation and a year in, we are cautiously optimistic," Shrimski told Reuters in an interview.

"Over the coming quarters, we'll continue to monitor what's happening outside of the Vanguard Super walls in terms of opportunities ... At the right time we'll make a move on the M&A side."

Australia's pool of retirement savings, at A$3.5 trillion ($2.32 trillion), is the fourth largest globally, the latest OECD rankings show, giving it a financial heft belying a small population and distance from key financial hubs.

Global fund managers such as Vanguard, which has assets of roughly $8 trillion, are drawn by the system that is growing rapidly, thanks to rules that set aside 11% of all wages for retirement, rising to 12% by 2025.

"We've seen U.S. visitors come here from Vanguard and they're in awe of the retirement savings system we have here in Australia," Shrimski said.

In addition to mergers, Vanguard is also looking to tap new customers via its deep links to the financial advisory community and by launching new products.

Vanguard will pitch its decades of investment management expertise, host of non-pension products and reputation for low fees when it begins selling its pension product through financial advisers next year, after having begun a pilot scheme.

Founded in 1992, the Australian pension sector is beginning to shift focus from growing members' funds for retirement to protecting nest eggs as the first cohorts start to leave work en masse.

Shrimski said a new product for retirees would launch within weeks.

($1=1.5065 Australian dollars)

(Reporting by Lewis Jackson; Editing by Clarence Fernandez)